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Sunday, August 03, 2008

Another Response to the Editor

A July 24, 2008 letter to the editor of the Chisago County Press (not available online) is posted here on this blog. The editor of the Chisago County Press responded to the original letter writer who made an excellent response to the editor on July 31 (posted here).

Here is an additional thought. The Chisago County Press editor complained that the state aid for road construction and maintenance in North Branch barely increased in 10 years. This was blamed in part on the merging of townships and cities resulting in a population of at least 5,000, making them qualified for state aid for roads. The Press editor argued the solution is to increase the gas tax. Consider another angle on this.

The state Constitution was amended in 1954 to give 9% of the gas tax to cities of 5,000 or more people (See MN Constitution, Article XIV, Section 5). Conditions have changed in the last fifty years. Perhaps the 5,000 number should be revisited and be changed to limit the number of cities receiving state aid or the state aid eliminated all together.

Cities smaller than 5,000 must pay for their local streets through property taxes, not the gas tax, even though they pay the gas tax just like those in cities over 5,000. What is fair about this arrangement? If a smaller city can and must pay for its local roads through property taxes, then why cannot it pay for them when its population exceeds 5,000? What is magical about that number?

Consider a city and a neighboring township. Residential development occurs in both. In each case, plats with streets are constructed at the expense of the developer. Maintenance, repair and replacement of those streets eventually become the responsibility of the local government, which pays for it through property taxes.

When these two entities merge and exceed 5,000 in population, why cannot the street work continue to be paid through property taxes without state aid? The street length stays the same. The tax base is still there. Why should the larger, merged entity now receive state aid for city streets?

I suspect some politician(s) back in the 1950s saw the opportunity to get state money for cities. People voted for the constitutional amendment without thinking about the consequences, believing that state aid is always a good thing. More importantly, the people thought it would not cost them—afterall, the state pays for it (not realizing the state has money only because we taxpayers give it to them). Furthermore, over time, more and more demands are placed on the tax arrangement that those voting for the constitutional amendment did not envision.

Now the state aid program is expected. Larger cities are addicted to it. Then when the state fund is cut into smaller pie slices, cities complain there is not enough to go around, which is a driving factor in raising the state gas tax, to fund the share that some cities receive.

The lesson? Keep funding as close to the local level as possible. Whether it comes from your property taxes or from the state gas tax, it is your money, but there are strings attached to the state’s money. Fight statism. Keep government as local as possible. That is a foundational principle of Republicanism.